From the Archives: Bill Gates

In the summer of 1975, Bill Gates dropped out of college and moved to a cheap motel room in Albuquerque, N.M. He was 19, restless, and driven by a single objective: to change the world.

Today the gangly, 29-year-old wunderkind is chief executive officer and chairman of the board of the Microsoft Corp. While the company is already doing well, Gates wants more: He vows to make his firm the “IBM of the software industry.” He is well on his way. Microsoft employs more than 850 workers, is under contract to provide software to every major computer manufacturer in the nation, and sell products in Europe, Australia, and Japan. His company amassed sales of $100 million last year.

His career path was everything most career paths aren’t: impulsive, unplanned, full of grandiose imaginings. He didn’t seek out markets, he created them; he didn’t evaluate opportunities, he seized them; he didn’t peddle his products, he seduced them.

Today, with his mop of sandy hair, his ingenuous blue eyes, and his casual attire, Bill Gates still looks like a dreamy, frail technoid. When he talks, he rocks back and forth on the edge of his chair, hands clasped between his knees. He speaks kind of colloquial computer-speak. “It’s awesome,” means he’s impressed. “That’s pretty random,” signals displeasure. This relentless, driven, multimillionaire inventor is, to all appearances, a personable kid.

But what a kid.

“Bill sells you the future,” one insider says. “If you don’t stick with him, you feel you’ll be left out.”

For Bill Gates, the future sprang from a decidedly colorful past. Just months before he launched Microsoft, he was a Harvard sophomore, devoting half his time to his course load and half to all-night poker sessions with professional gamblers. For Gates, the passion for card-playing wasn’t in the wagering, it was in the tactics and computations that accompanied each hand. Poker, he says, was “mathematically interesting.”

In fact, Gates’ love had long been numbers. The son of an influential Seattle lawyer, Gates was only 14 years old when he took his first experimental pokes at a small computer. From that moment, his life changed. Within a few months, he had written a tic-tac-toe program, a Monopoly program, and a complicated war game. At 15, he joined forces with a friend, Paul Allen, to design hardware and software that would analyze traffic patterns. The adolescent entrepreneurs launched a tiny company that grossed $20,000 within a year.

In 1972 Gates took a year off from science, but not from finance. Spending the year as a congressional page in Washington, D.C., he teamed up with a friend, bought 5,000 McGovern-Eagleton buttons for a nickel each, and sold them for $25 each when Sen. Eagleton was dropped from the Democratic tickets.

When he came home, the 17-year-old Gates was tapped to help computerize the power grid that controls all electricity to Vancouver, Wash. “They called me and I flew down for an interview without telling them I was still in high school,” Gates says. “I convinced my parents to let me take a year off, and I went down there and learned a lot.”

One thing he learned was a ravenous appetite for work. The next year, at Harvard, Gates took on a crushing load of seven courses in one semester, most of them math-related. For the teen who’d already founded a business, designed computer programs, and helped a power company light a city, a Harvard education was just another project.

But the project would soon be interrupted. A year later, Allen, also in Boston, told Gates about the invention of the world’s first personal computer. The primitive little system had been designed by MITS, a small firm in Albuquerque. The computer showed promise, but at the moment MITS was at a bit of a loss. Having built the hardware, the engineers had yet to write any software for it in the widely used computer language known as BASIC. The wondrous new contraption was more than ready to go to work, but at that point, nobody knew how to tell it what to do.

Gates thought he could solve the problem. “Paul and I called them up and said ‘We’ve got it already,’ and they said, ‘Sure, sure, we’ll believe it when we see it.’ We spent 18 hours a days for three weeks writing BASIC, without even having the real machine to work on.”

With little way to test their program, Gates and Allen found themselves relying on little more than instinct, theory and scientific coin-flips. When they finished, Allen simply bundled up the untried software and boarded a plane for New Mexico. “He flew down there and bang, bang, bang it worked,” says Gates. “I couldn’t believe it and neither could the guys who built the machine.”

Flushed with success, Gates decided not to return to Harvard. With Allen at his side, he founded the Microsoft Corp. Propelled by the MITS victory, the two quickly succeeded in selling their BASIC programs to other manufacturers tinkering in the personal computer field. Gates and Allen also began convincing software programmers to use BASIC in their programs. With the help of this kind of free promotion, Gates began slowly and steadily spreading the BASIC habit. His tactics were simple: Help make BASIC the standard of the industry and then stand back and offer to satisfy the demand you’re creating.

The Upstarts Diversify

The strategy worked. The company began to diversify and expand, soon designing and marketing other computer languages as well. As corporate fortunes climbed over the next three years, Gates and Allen knew they couldn’t handle the hiring and marketing alone. What they needed was an energetic and aggressive manager who would leave the two free to work and would then saturate the market with whatever they might concoct. What they needed was Steve Ballmer.

Ballmer and Gates had met in college and were, according to Gates, as different as two people could possibly be. “At Harvard I was pure,” Gates says. “I was into theory. All Steve wanted was to put his mark on the wall.” But their differences ended up drawing them closer together; the two became fast friends.

In 1978 Ballmer had just completed three years at Proctor & Gamble and had left to enter business school at Stanford University. “Now, nobody just drops out of business school,” Gates says. “Just nobody, especially with Steve’s record.” But Gates knew he wanted Ballmer and he set out to get him. “I got a few of his professors at business school as key allies. I tried to get his parents on my side, but that didn’t work, so I got my parents to take him out to dinner.” And, Gates adds with a smile, “I made him a very generous offer.” That year, Steve Ballmer joined Microsoft.

With its leadership troika in place, the company continued to grow and prosper. But it was not until 1980 that real corporate gold was struck. It was that year that a slumbering behemoth called IBM woke up and decided to build a personal computer. The first place they turned was Microsoft. The giant sought out the software upstart asking for programs. What they got, in addition, was advice.

The meetings went on for months. Gates pitched his plans and ideas and insights and IBM listened.

“They saw how excited we were about our role in creating that great machine,” Gates says. “I told them it should have open architecture and graphics capability, and I showed them how to do that.”

A full year went by, and the meetings continued. Finally, the next summer, IBM convened a press conference to announce the completion of its new personal computer. At the heart of the machine would be a floppy disk system that would oversee all of the computer’s functions and allow it to run other programs. Every IBM computer would rely on this one bit of software. The Disk Operating System would be known by the initials MS-DOS, the MS standing for Microsoft—Bill Gates’ Microsoft.

The boy from Seattle had indeed changed the world.

An Ever-Upward Spiral

Five years later, Microsoft is still expanding. Sales have doubled every year since 1977, and last year the company invented and released the Radio Shack lap-size computer, the hardware hit of 1984. Microsoft’s corporate worth currently is estimated at $240 million.

Gates and president John Shirley now run the corporation. Ballmer, who once personally supervised much of Microsoft, has since backed away from most of the day-to-day activities, delegating responsibilities to officers he selected. Allen, who contracted cancer in 1980, is on leave from the company temporarily. Though the disease is currently in remission, he has reduced most of his responsibilities at Microsoft.

“I’m always there at night, so people come by and talk to me,” Gates says. “Like IBM, we want to invest in our people. It pays because you get a sense of community commitment and loyalty.”

To be sure, Microsoft has not been without growing pains. Says Chris Christiansen, a senior research analyst with the Yankee Group in Boston, “They’re in excellent position and have many excellent products. But the one thing they don’t have is a blockbuster. According to my numbers, Lotus (software) is now larger.” Vern Raburn, a former Microsoft vice president and now president of Symantec, a new software company, notes other problems as well. “Microsoft is in a super position and they’re a healthy company. The biggest problem they have is credibility. A product called WINDOWS, which they announced long ago, still hasn’t been shipped.” Indeed, in May, Microsoft announced the release of a new business program called EXCEL, but the company doesn’t plan to deliver it until September at the earliest. “So why announce it four months early?” asks Raburn. Nevertheless, he believes Microsoft can overcome these problems. “Bill Gates is a totally unique guy. He’s one of the smartest guys I’ve ever met. He’s also the most driven.”

Gates himself sees it a little differently: “When I was a kid, they used to call me Happy Boy. I was very energetic and I smiled all the time. Just remember me as Happy Boy, the guy who taught computers to be smarter than human beings.”